Prada’s Mainland China Sales Up, But Hong Kong Disappoints

on August 6 2014 | in Retail | by | with No Comments

Prada, first half profits, demand in China

Robust sales in China offset slowing sales in the rest of the world for Italian luxury handbag maker Prada.

The company’s revenue rose one percent to 1.75 billion euros (US$2.34 billion) through July of this year, reports Bloomberg. This was the weakest sales growth for Prada since it was listed on the Hong Kong stock exchange in June 2011.

Sales in China were up 12 percent, though sales in the rest of the Asia-Pacific region were disappointing, falling 2 percent with weak sales in Korea, Hong Kong, and Singapore.

Asia sales have been hurt by Hong Kong, in particular. Year-on-year retail sales in Hong Kong were down 6.9 percent overall, the fifth straight decline. The importance of Hong Kong to the retail health of the Asia-Pacific region cannot be overstated as it is a premier shopping destination for tourists in Asia. Slowing sales in Hong Kong have affected Prada as well other luxury companies such as LVMH and Gucci.

Furthermore, watches, jewelry, and other high-end products were down 28.2 percent due to the Chinese government crackdown and slower economic growth in mainland China as a whole.

According to Prada, the company’s handbag category, which has higher profit margins and more year-round appeal than apparel, has been most affected by slowing sales to tourists. In fact, handbag sales were down five percent from the same period last year, down one percent at constant rates.

Prada’s stock has fallen 21 percent overall this year on the Hong Kong stock exchange.

image credit: prada

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